The Following Figure Shows the Production Possibilities Curves (PPCs) of Two

question 234

Multiple Choice

The following figure shows the production possibilities curves (PPCs) of two individuals, Ryan and Tom.

-Refer to the figure above.Which of the following statements is true?

• A) Tom has an absolute disadvantage in the production of Good 1, whereas Ryan has an absolute disadvantage in the production of Good 2.
• B) Ryan has an absolute disadvantage in the production of Good 1, whereas Tom has an absolute disadvantage in the production of Good 2.
• C) Tom can produce fewer of both goods given the same amount of resources as Ryan.
• D) Ryan can produce fewer of both goods given the same amount of resources as Tom.

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Definitions:

Break-Even Level

The point at which total costs and total revenue are equal, resulting in no net loss or gain, and the point at which a business, product, or service becomes profitable.

Net Present Value

A calculation used to determine the present value of a series of future cash flows by discounting them at a specific rate.

Initial Cash Outlay

The initial amount of money spent to make an investment or start a project, not counting ongoing expenses.

Fixed Costs

Costs that do not vary with the level of production or business activity.